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Insurance companies are the only ones who stand to gain from these dangerous policies – and even insurance companies are sometimes left in the dark about the actual logistics of the businesses for which they provide policies. However, ghost policies are seen as a way of skirting the law and tempting devastating consequences. Ghost Policy. SIS Wholesale Insurance Services. Low workers compminimum premiums and down payments for small business- including ghost policies for subcontractors, artisans, and truckers. Competitive markets for all classes and payrolls- including high mods complex exposures. If it does have to go in assigned risk for a period of time, we.
- This case is based in the State of Missouri where the client purchased his ghost policy through Travelers Insurance Company the work comp pool administrator that ran June 1st to June 1st
- He is a carpentry contractor who builds homes and has no employees. He is not included in coverage under his policy.
- He consistantly uses one subcontractor who performs framing work for him, he pays this subcontractor about $70,000 each year.
- The subcontractor consisted of two brothers, working together, who excluded themselves from coverage and who also purchased a ghost workers comp policy of their own through Travelers Insurance Company that ran June 1st to Juns 1st.
- The client secured a valid certificate of insurance from the subcontractor which indicated coverage for the duration of his policy period.
- Travelers, upon receiving the audit information from the Client which included the certificate of insurance, checked their own records for valid coverage on the subcontractor and found the subcontractors policy had cancelled in August.
- Travelers then included the entire amount of money the Client had paid to the subcontractor on his audit ($70,000) and sent our Client a bill for $12,000!
This is more a typical type of problem that arises with the workers compensation ghost policy than you might expect. While we were able to help our Client in this situation it still cost him several thousands of dollars that he had not expected to pay! A serious problem for a small business owner.
So as a final thought, be careful if you have secured one of these policies, stay on top of any subcontractors you use and keep updated, continous certificates on file. And be especially careful if your policy is issued by the same insurance company that insures your subcontractors!
If you have any problems with one of these policies or if we can be of any assistance to your business just give us a call!
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